Yen Surges Amid Speculation of U.S.-Japan Intervention

The yen reached a two-month high as speculations of a coordinated intervention by U.S. and Japanese authorities grew. The FX market witnessed a game-changing move, with the U.S. Federal Reserve checking currency rates, sparking investor response and impacting global currency markets, as well as precious metals.

The yen surged past a two-month high on Monday amid growing expectations of a joint intervention by the U.S. and Japanese authorities. This possibility was hinted at by Japan's top currency diplomat, setting markets abuzz. Investors, wary of the Federal Reserve meeting, began adjusting their dollar positions ahead of a possible new Fed chair announcement.

The yen climbed 1.2% to 153.89 per dollar, its strongest since November, while the euro hit a four-month high. Holiday-thinned trading in Auckland and Australia spotlighted the uncertain Tokyo session. Prime Minister Satsuki Katayama's statement on countering speculative market actions further stirred the markets.

Amidst rumor-driven trading, the New York Federal Reserve checked dollar/yen rates, potentially foreshadowing intervention, which spurred a scramble to exit short yen positions. This development, marking the Fed's rare involvement, has traders on edge, eyeing a possible collaborative move with Japan for greater effectiveness.

(With inputs from agencies.)